Bitcoin Forum

^^^title says it all...

I don't think so. You should probably just stick to making pirate movies.

I guess it just depends on your countries law. But it's probably not really legal...

I think you could structure a sole proprietorship, but that is when your problems start. In the U.S. I think you will need to get a money transmitter license. It varies state to state, but it can run into the millions of dollars in some states. Its an unholy system to keep the little man out of banking. (you and I are little men). If you could come up with a system that transfers the liability and licensing requirements to another party, then maybe there is a way to get in the revenue stream with limited exposure to regulation.

AFAIK, direct trading exchanges like LocalBitcoins do not need any license to opearate as they do not touch FIAT themselves. They operate as an advertising platform similar to craiglist.

Ah, so are the sellers using the site technically the taxable entities? That makes sense, but I would worry about what happens when they refuse to pay. Would I as a business be required to report their sales? I don't know? But I know Craigslist has spent a lot of time in court because many early users were advertising prostitution services.
I hope someone can find a way through this. I think it is a good business if you can get there.

Yes, sellers are taxable and if they make big sales, they are to be licensed to do so. Just like most sellers on Amazon have their own trade license. If authority asks the trade details of a seller, LocalBitcoins will probably reveal that. Illegal service ad is always a problem for web ad platforms. Not only CraigList, but also eBay to OLX, everyone faced this problem. If someone tries to sell Drug against bitcoin on LocalBitcoins, then they'll come under investigation. But, none of these stops an entity to legally operate as a propritorship firm.

Hey thank you for that clarification.  :)

But the LBC itself holds the coins in escrow during sales. They're not just linking buyer and seller, they're participating in the sale. Casascius was shut down without going anywhere near USD.

Casascius was dealing with physical goods. Laws are altogether different for that. It requires VAT, export permit etc. LBC holding coins for escrow merely makes them a service provider, like at Freelancer the platform holds the money. Freelancer does not need a money transmitter license or anyone with a proprietorship license can run a service like Freelancer.

The only reason he was shut down for money transmitting. It was nothing to do with physical goods. He has carried on selling them perfectly happily without BTC value.

That's right.   “They considered my activity to be money transmitting,” he told Wired’s Robert McMillan of the FINCEN letter, and the Treasury insists that such activity adhere to certain regulations.
http://rt.com/usa/caldwell-casascius-bitcoin-mint-157/

But, AFAIK LBC does not have any money transmitting sort of license. They operate like online ad platform. Hence we have seen many cases where authorities took action against high volume sellers on LBC, but there was no action against LBC itself.